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ReadPrices go up, prices go down — but Bitcoin is here to stay. And as cryptocurrency continues its march toward the mainstream, and becomes more entwined with the global economy, sooner or later you’re going to need a place to store yours. Bottom line: If you’re looking to invest in Bitcoin or , you’ll need a wallet.
Given that we’re talking about digital currency, “wallet” is a metaphor. As a to store your proof of ownership, a can take the form of physical hardware or software installed on your computer or smartphone or in the cloud. Well-known services like , and allow you to and other cryptocurrency quickly and with little technical know-how. Most of these online services, and their integrated wallets, are custodial, however, which means you’re trusting the company to secure, protect and hold your cryptocurrency. Ultimately, they have control — and your crypto is in their proverbial hands.
As such, unless you make frequent transactions or have only a modest amount of money involved, we recommend you not store your cryptocurrency in an exchange account. The best practice is to invest in a hardware wallet for offline storage. The next best choice is a noncustodial software wallet, which gives you more control over your digital assets. We’ll look at both here.
In either case, greater independence brings with it responsibility: You’ll have to keep track of your own private key — the crypto equivalent of a super secure password. You’ll also need to determine which is a higher priority — accessibility or security. Hot wallets store cryptocurrency online; cold wallets are disconnected from the internet, offering additional insulation from hackers, but also a few additional steps every time you transact. Read on to find out which wallet is best for you.
Coinbase, , is the best known exchange in the US. The company makes it easy to trade from Bitcoin to Dogecoin, and has that integrates with Apple Pay and Google.
If you’re new to crypto, the Coinbase Wallet is a good place to start. It can be downloaded as an app for Android or iOS, the interface is intuitive and the wallet is fully integrated with the company’s exchange, which makes it easy to conduct transactions — including purchasing coins and tokens with traditional currency.
Unlike the company’s exchange, the ; that means that only you have access to your wallet’s private key, which is generated with a 12-word recovery phrase when you sign up. Note that there’s a difference between storing your cryptocurrency on Coinbase’s exchange, which is custodial, and the wallet, which is not. But the integration between them makes it fairly simple to transfer funds back and forth.
Trezor via Amazon
Trezor’s new user interface, , just came out earlier this month, replacing the company’s Wallet Web app. This analysis reflects our initial impression of a new product, therefore. But Trezor has been around for quite some time, as a subsidiary of Czech-based SatoshiLabs.
The $190 Model T is Trezor’s second-generation hardware wallet, and it comes with many of the same features as the Ledger Nano X, detailed below. One major difference is that Trezor’s software is completely open-source, which affords some additional protection — theoretically, at least: The code that powers the wallet is available for scrutiny, and, the thinking goes, sunlight is the best disinfectant.
Trezor Suite is designed to run natively on your desktop, which generally provides greater security than a web-based app, though you can also access Trezor Suite through the company’s website. Trezor wallets currently support , and you can make transactions directly in Trezor Suite with the company’s integrated exchange.
Shaped like an old-school stopwatch, the Model T comes with a touchscreen and a USB cable to connect to your computer; it also features a microSD card if you want to add encrypted storage directly to your hardware wallet. It does not feature Bluetooth support, however — an omission that some security advocates prefer, as Bluetooth connectivity could be an attack vector for hackers to exploit.
Crypto wallets explained
The is Ledger’s second-generation cold storage wallet. The integrated Ledger Live platform, which is easy to learn and use, supports more than 1,800 coins and tokens including Bitcoin, Ethereum and XRP. The wallet can be connected to your computer via a USB cable and Android and iOS mobile devices via Bluetooth — a connection the Model T lacks.
The device is sturdy and features a small LED screen. To start, you’ll set up a PIN, then a 24-word seed phrase. The seed phrase acts as your wallet’s private key. Just like other wallets, as long as you keep the private key safe, you won’t lose your crypto assets — even if you lose your wallet.
It’s important to note that Ledger suffered a data breach in July 2020, which resulted in the theft of some customers’ personal data — but, significantly, not their crypto assets. No private keys to wallets were taken, but there were of customers receiving phishing emails and other scamming threats afterwards. That noted, Ledger has long been a trusted name in the crypto world, but the data breach is a good reminder to be careful online — especially when it comes to dealing in crypto assets.
Exodus is a hot wallet, which means that your assets are stored online; but it’s noncustodial, which means that only you have access to your private key — a 12-word password phrase that protects access to your crypto assets.
The Exodus wallet is designed to run on Mac, Windows and Linux computers, though there’s a companion app available for Android and iOS devices. The user interface is slick and easy to learn. Your wallet is seamlessly integrated into the Exodus exchange, so it’s easy to make transactions.
Exodus supports more than 130 types of cryptocurrency including Bitcoin, Ethereum, Tether USD and Dogecoin. But the exchange has some noteworthy limits: If you want to purchase crypto with US dollars and store it in the Exodus wallet, you’ll need to first purchase the asset on a centralized crypto exchange, such as Coinbase, and then transfer the assets to Exodus. The app version allows purchases of Bitcoin with USD. And once you have an asset in your wallet, it can be easily exchanged for other supported assets. While the wallet itself is free to use, Exodus charges a fee for transactions made via its exchange.
Hot storage wallets are generally considered less secure than cold storage wallets, and some Exodus users may eventually want to upgrade to cold storage. The good news: Exodus is fully compatible with hardware.
Mycelium has been around since the beginning of the crypto era, and the is one of the oldest and best-known Bitcoin wallets. This is a mobile-only wallet — there is currently no desktop version — that supports both Android and iOS.
The Mycelium wallet has an appealingly simple interface but it supports fewer kinds of crypto than others profiled here: You can send and receive Bitcoin, Ethereum and ERC-20 tokens such as Tether USD, USD Coin and Binance USD — but not the hundreds of esoteric coins that have been developed over the past few years. You can buy and sell Bitcoin directly in the app, and Mycelium lets you buy Bitcoin with regular fiat currency.
The Mycelium wallet is noncustodial, so you’ll have sole access to your private key and PIN. This wallet is also the only hot storage wallet on our list that’s completely open-source. Though there are security advantages in that, it also comes with limited tech support options; basically, if you get stuck, you can submit a help ticket to the email address listed at the .
For more advanced users, Mycelium supports QR codes, allows you to set custom transaction fees and offers compatibility with hardware wallets from Trezor, Ledger and KeepKey.
Do I need a crypto wallet?
If you want to invest in cryptocurrency, you should invest in a wallet. That noted, if you’re just dipping a toe, services such as PayPal and Robinhood allow you to buy a coin or fractions of a coin and store it on their servers. These are custodial wallets, however, where you don’t hold the private key. We recommend noncustodial wallets for long-term cryptocurrency users and investors.
How much money do I need to open a crypto wallet?
It depends. Hardware-based wallets generally cost between $100 and $200, though many software-based wallets are free. Most don’t require you to actually own any cryptocurrency.
Which wallet is best for beginners?
If you’ve never used cryptocurrency before, we recommend Coinbase Wallet. Coinbase is a well-known, US-based crypto exchange that’s easy to use, and it works well with Coinbase Wallet.
Which wallet is best for advanced users?
Today’s cold storage wallets can be quickly and easily connected to the internet for fast transactions, so most advanced users nowadays are probably most interested in a cold storage wallet. The hardware wallets sold by Ledger and Trezor are both good options.
What are the risks?
Cryptocurrency is subject to far less regulation than conventional investments and securities. While the lack of oversight is an attractive feature to some investors, it’s important to know that Bitcoin and other cryptocurrencies are highly volatile, experience dramatic price swings on a daily or even hourly basis and lack many of the protections of other forms of investment. The risks are significant.
Are assets in crypto wallets insured?
While the companies offering crypto wallets may offer some guarantees to customers and users, the Federal Deposit Insurance Co, are gathering information and considering legislation for the future.
What’s the safest crypto wallet?
Cold storage wallets are generally thought of as a more secure way to store cryptocurrency when compared to a hot storage wallet. If you plan to store a large amount of coins or tokens for any length of time, we recommend using a cold wallet.
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